Dan Liljenquist: Detroit could rebound with determined leaders

FILE - In this July 19, 2013 file photo, Michigan Gov. Rick Snyder, right, and state-appointed emergency manager Kevyn Orr leave a news conference in Detroit after addressing the city's bankruptcy. The decision to make Detroit the largest U.S. city to file for bankruptcy protection was tough to make, but it was the right one, Snyder said Sunday, July 21, 2013, as he and Orr made the television talk show rounds.

Detroit is dying. Tens of thousands of abandoned homes, apartments and offices are, like necrotic, gangrenous tissue, besieging, infecting and cannibalizing the last remnants of life in this once mighty city. The blighted landscape, overwhelming in its déj?vu sameness from block to block, is eerily silent, garnished by graffiti, blanketed by weeds, shards of glass crunching underfoot. After decades of mismanagement, the Motor City's populist politicians are out of power, having played out their last charades on the public stage, abandoning their faith-healer facades while furtively exiting stage left into the night, turning the keys of the city over to state crisis managers. Detroit, "the 313," Motown, is critically, perhaps terminally, ill, and there is no miracle cure, no marvelous balm, no magic potion that can heal it.

But I believe Detroit, with the right leadership, can emerge from the ruins and be reborn. The first step — a step that should have been taken years ago when Mitt Romney was attacked for suggesting it, a step that President Obama claimed would no longer be necessary due to the federal auto-bailouts, a step finally taken last week by Kevyn Orr, Detroit's emergency financial manager — is to file for bankruptcy. Reducing and restructuring its debt through bankruptcy is the only realistic way for Detroit to end its financial death spiral, stabilize its economy and move forward into the future.

Economic activity is the heart of all civilized societies, pumping the life-blood of productive effort into all corners, animating, nourishing, sustaining our very existence. Detroit's economic blood pressure has collapsed along with its population, its remaining citizens unable to generate enough economic life to sustain the legacy costs of yesteryear.

Detroit owes its creditors $16 Billion, more than $22,000 for every man, woman and child in the city, at a time when it cannot afford to field more than a skeleton police force, allowing criminals to rule the streets; at a time when retiree benefits are consuming one-third of the city budget; at a time when 53 percent of citizens can't or don't pay their property taxes. Who in their right mind would move into Detroit under such circumstances? Who in their right mind would stay if they had the means to flee? Detroit must stem the exodus of its middle class, rather than looking for new ways to make them pay their "fair share" of its debts. Until its debt crisis is resolved through bankruptcy, the middle class (what's left of it) will continue to leave.

Detroit is the largest city in the history of the United States to file for bankruptcy. It will undoubtedly be a contentious affair, potentially plowing new legal ground for other troubled cities to follow. Creditors and public sector unions, falsely secure in their long-running assumption that politicians can always dip into the taxpayers' pockets for more revenue, are apoplectic by the bankruptcy filing. Minutes after Detroit filed its petition, a circuit judge ruled that the bankruptcy filing violates Michigan law and must be withdrawn. Her ruling was immediately appealed and it will take the courts a while to sort things out. I suspect, in the end, bankruptcy proceedings will progress, and Detroit will emerge from the bankruptcy process in much better financial shape.

It is time for a fresh start in Detroit, and I am encouraged that its new leaders are fearlessly determined to move the city forward. Much of its infrastructure is still usable. Housing costs are low. Labor is abundant. With a clean balance sheet, Detroit could begin rebuilding, perhaps even harnessing again the energy and ingenuity that once made it great.